During last week’s TSAM conference, I participated in the Performance Measurement & Investment Risk stream, chaired by Sean Murray - Head of Product Strategy at BISAM - and was struck by the ever-increasing theme of unified performance and risk, not only from an analytics perspective but from a team perspective too. Some asset managers’ performance and risk teams have actually been integrated for some time, and many of those folks have suggested that their long term goal is not only to integrate performance and risk operations, but also to seek a single provider of performance and risk analytics and reporting capabilities.
While broadly covering this topic throughout the day, the first panel discussion, which I found very interesting, was more specifically on system selection, migration and implementation. The first question a performance or risk team has to answer is: Are we using the right system, and is it bringing value to my business?
If not, here is a summary of the advice from the panel session to help guide you in toward successful selection and implementation processes.
- Follow a Clear and Phased Process
The panelists collectively emphasized the importance of having a global process in place when it comes to performance and risk systems selection. Going through RFP and POC processes are now a must and demonstrates the vendor’s ability to support the business.
- Involve Internal Stakeholders from the Start
One of the panelists stressed that from an internal point of view, a screening of all stakeholders has to be made before the first phase of the project. The whole selection process is time consuming, and so it is key to ensure that you have backing from the highest level of the organization, and supported by the requirements from internal data consumers, i.e. marketing, sales, portfolio managers, etc.
- Get Feedback from the “end users” on the Performance & Risk Teams
In the end, the performance and risk analysts are going to be the ones using the system; they need to be part of the project as early as possible and involved in the selection. One of the panelists even mentioned that the entire team should be at all meetings to inform all phases.
- Use POC as Pre-Implementation Test
POCs are critical and time consuming both for the vendor and for the practitioners, so make it count. Make sure your vendor is involving its implementation teams (and not just pre-sales) and that they learn the lessons from it, so that they don’t have to start from scratch when it is time to implement.
- Partner with your vendor
A performance and/or risk vendor is not just a supplier; they are a team whom you are partnering with for a number of years, even sometimes a decade. Their teams are going to be nearly as involved in your performance/risk teams as your own analysts. Establishing a real partnership will be valuable for all and is key to ensuring delivery of a successful project in the long term.
- Look for Cutting Edge Capabilities
This may be last, but it is certainly not least. While today, apart from multi-asset performance attribution, which still brings up challenges, most methodologies are effective. However, the panel discussed the importance of finding cutting-edge analytics capabilities: workflow, deadline management, scalability, automation, process approvals, checks, validation, etc.These capabilities are key to being able to scale efficiently and to give your performance analysts the ability and time to actually analyze results and handle exceptions rather than managing the calculation process.
As one panelist put it: “Look for the 10% most vendors can't do and find the vendor which can!”
Proper risk analytics are essential for understanding and driving performance of investment portfolios. Visit www.bisam.com or email firstname.lastname@example.org to request more information about BISAM’s award-winning, multi-asset class solutions for performance, attribution and risk management.